BigBasket case Study:- VPmarketing

BigBasket case Study:- 

INTRODUCTION: -

Out of the $2 trillion retail market in India, $300 billion is grocery.

Founded in 2011 and headquartered in Bengaluru, bigbasket.com (Innovative Retail Concepts Private Limited) is India's largest online food and grocery store.

BigBasket operates in 30 Indian towns and cities serving up 18,000 products across over 1000 brands.

BigBasket is India’s biggest online store for grocery shopping.

It was founded in 2011 by a group of people named  Mr. V S Sudhakar, Mr. Hari Menon, Mr. Vipul Parekh, Mr. Abhinay Choudhari and Mr. V S Ramesh.

BigBasket currently operates from Banglore, Mumbai, and Hyderabad and providing their services in 22 different cities in India.

With more than 1800 grocery products and 1000 brands featuring on BigBasket.

BigBasket.com with 18000+ products and 1000+ brands listed on their catalogue is known to be India’s largest online food and grocery store.

It offers a wide range of options in every category to provide you with the best quality products at the lowest prices which include – fresh Rice and Dal, Fruits and Vegetables, Spices and Seasoning’s, Packaged products, Beverages, Personal care products, Meats, and many more.

India’s grocery market

India’s grocery market has rapidly grown even though it is still has a small market

share. The market share estimated is INR 22,5 trillion (USD 350 billion) and remains as

the top 10 of food and grocery market in the world. The market growth is around 10%-12%

CAGR between 2010 and 2015. The size of online grocery market is still below 1% of overall

food and grocery sales at around INR 40 billion (USD 0.6 billion). However, the growth itself

reached 35% CAGR with market penetration

around 2.3% (EY, 2015).

How BigBasket started?

History Behind Bigbasket:

The founders of BigBasket first time got together is 1999 and started one of the first online business in India with the name of fabmart.

 As a part of fabmart they started online grocery business as Fabmart.com.

This business did exceedingly well in the market and company went to set up various physical supermarkets in South India.

In 2006 FabMart was acquired by Aditya Birla Group and renamed the brand to More Supermarket. However, the same team got back in 2011 and launched BigBasket.

It all began in 1999, when Hari Menon along with five of his friends- VS Sudhakar, Vipul Parekh, Abhinay Choudhari and V S Ramesh launched their online retail website called ‘Fabmart’.

Even though they did manage to get some traction but since their idea was way ahead of its time, they could not shake the masses.

They decided to start their online business again and focused all the energies on ‘Fabmall’, their physical retail chain of grocery stores.

They also merged this chain with another grocery retail chain called – ‘Trinethra’.

Within a period of seven years they expanded their business to 200 stores across Andhra Pradesh, Tamil Nadu, Karnataka and Kerala. At that point of time they decided to sell their business to Aditya Birla Group but Krishnan Ganesh an entrepreneur concluded to go ahead with it.

And finally in December 2011, they launched BigBasket.com.

They failed to get some traction as their idea was way ahead of its time, so they could not work for the masses.

That was the time when they all decided to put the online business on the backseat and focus totally on ‘Fabmall’ with all their energy.

Fabmall was their physical retail chain of grocery stores.

They too merged this chain with another grocery retail chain known as ‘Trinethra’.

Implementing many strategies and with hard work, in a matter of seven years, they succeeded to expand their business to 200 stores across Andhra Pradesh, Tamil Nadu, Karnataka and Kerala.

Around the same time, they also decided to sell-off the business to Aditya Birla Group.

Future of Online Grocery Market In India:

The grocery retail market in India is growing at 10% CAGR(Compound annual growth rate) which is currently about the size of 400 Billion.

Out of which online grocery accounts to only 0.1% of it.

The Online grocery market is expected to grow to 10 billion dollars in next 4 years and is likely to be concentrated in urban areas of the country.

Funding Received

Soon after their launch, they received their first funding of $10million from ChrysCapital co-founder Raj Kondur and Ascent Capital.

There were 15 funding rounds of more than $100 million in the whole year of 2014.

So far this year, BigBasket has raised $150 million in fresh round of funding led by UAE’s Abraaj Group to expand its services into smaller cities.

Existing investors Bessemer Venture Partners and Helion Advisors along with International Finance Corp and Sands Capital also participated in the round.

BigBasket highest fund raising was 150 million dollars in March 2016 led by Abraaj Capital in its Series D of funding.

Some of the other investors are Bessemer Ventures, Helion, Zodius and existing investors who participated including Ascent Capital, Lion Rock Capital and Ganesh Krishnan and Meena Ganesh.

Recently BigBasket has raised 45 crores from Trifecta Capital which takes the complete tally of funds raised to 290 million dollars in its 8 series of funding from 11 investors.

Business Model

When BigBasket started its operations, it adopted the ‘just-in-time model’ means  they were purchased-to-order.

 In this model, the delivery boy directly picks up the item from the retailer, and directly delivers it to the customer.

due to urban density and parking issues, online grocery service stacks up in convenience.

BigBasket’s value proposition is convenience and selection.

Today BigBasket is India’s biggest and most used online grocery store in India.

They deliver 35000 orders per day with the average price of the order is 1500.

BigBasket has products of their own and allows other companies to showcase their product on the portal.

With more than 40% of orders coming from their own brands and remaining on other brands.

BigBasket operates at the margin of 35% on the sale of their own product and 25% on the sale of third party products.

The company also introduced an express service, delivering groceries within 90 minutes of an order being placed.

."—Pramod Jajoo, Chief Technology Officer, Bigbasket

  Bigbasket built from the ground up using Google Maps Platform. It makes sure we have the right customer locations and deliver to them on time. We couldn't have started Bigbasket without Google Maps. It helps us to be fast and efficient, and make sure our customers get what they've ordered quickly

Google map USE:-

Bigbasket needed a mapping platform that could help it meet its delivery times, and offer a familiar interface to customers – They used google map.

MediaAgility, a digital consulting company, recommended Google Maps Platform to Bigbasket.

When customers use the Bigbasket mobile app to place orders, they select their locations on a Google Map.

The prices and availability of groceries varies according to location, so a customer's location determines the cost of the order and what can be ordered.

It is also used to determine driver routes.

Bigbasket used the Maps Javascript API to build a web-based app for the company's backend that tracks all orders and delivery progress.

Dispatchers use the Directions API to match drivers with orders and customers, and the Distance Matrix API to get estimate the time of arrival for deliveries.

As dispatchers track the progress of deliveries on the map, they can tweak routes as necessary.

SCALE OF BUSINESS

Bigbasket handles more than one million orders per month, and delivers in more than two dozen cities in India

Bigbasket now has more than four million customers

Orders are delivered on time, increasing customer loyalty

Over 1 million grocery orders are delivered each month

BigBasket today boasts of over four million registered customers, 2.5 million transacting customers and sales of Rs 150 crore per month

Earlier this year, the team also launched their B2B segment, Horeca, which is handled by a separate team.

BigBasket will be touching a revenue of Rs 1,800 crore by the end of this fiscal year. Though they are targeting close to $1 billion in revenue by 2020, grocery is an extremely difficult business.

DIVERSIFICAATION:

They are looking at a cold chain investment and are setting up large facilities in Vijayawada and Ananthpura in Andhra Pradesh, which are slated to open in 2017. BigBasket is today present in over 25 cities, and is shifting focus from further expansion to deeper penetration. Of the revenue, touching close to Rs 1,800 crore, fruits and vegetables contribute 18 percent, BigBasket staples contribute to 15 percent, branded staples 20 percent and FMCG 45 percent.

Current Scenario

BigBasket has been implementing a Hyper-local strategy, wherein, it has joined hands with more than 1,800 neighbourhood grocery stores across India to deliver goods within an hour.

Looking for the current scenario – BigBasket now processes almost 20,000 orders a day, with the involvement of 2000 team members.

Earlier they had acquired a hyper-local delivery start-up ‘Deliver’, to further strengthen its delivery service.

 Although, the company still functions as an independent firm, but the co-founders of Deliver have also been included in the management team of BigBasket.

This acquisition has helped BigBasket in their Express Delivery model, to delivery groceries in one hour.

Customer Service:

The company also introduced an express service, delivering groceries within 90 minutes of an order being placed.

One of the biggest factors in BigBasket’s success is exceptional customer focus.

The company offers same day delivery with in the city with more than 99% on time delivery and 99.5% of order fulfillment rate.

BigBasket’s return policy is also very simple and they have a policy of no questions asked to the customer while returning.

All of these things have built a loyal customer base and excellent customer feedback.

it guaranteed to deliver goods within a one-hour delivery slot of its customers' choosing or it would refund them 10 percent of their orders.

PROBLEMS FACED:-

Bigbasket was faced with a challenge of low push notification delivery.

This was mainly due to the OS-level, device level restrictions in certain Chinese OEM devices.

So, push notifications sent by Bigbasket were not being delivered to these devices, thereby affecting overall engagement rate of the app.

With 51% of the Indian smartphone market comprising of Chinese OEM devices, the drop in push notification delivery and engagement negatively impacted Bigbasket’s business.

There is a strong focus on convenience, but customers are also wary of missing or not getting deliveries on time

Ozonetel

Tracking customer emails and the response time was a challenge which was not being done in real

time. Same was the case with the comments on Social Media (Facebook, Twitter) – which are now addressed in real time with Ozonetel platform.

BigBasket has multi-channel connect points with its customers – be it voice, email or social media.

During every interaction a ticket is raised.

Prior to the Ozonetel implementation, all the tickets were raised individually which created confusion and took longer time to respond to the customer.

But now, all customer interactions from their registered contacts gets raised in one ticket – allowing the support team to have a better insight as well as be more productive.

This also enables a seamless interaction with the customer.

EXPANSON:-

They are now operational in 20 cities which include six metros, and are in plan to expand to 50 more tier two cities soon.

They will also be opening 8 large warehouses in metro cities.

PROMOTION:-

mid of 2015, BigBasket also roped in Bollywood actor – ‘Shah Rukh Khan’ as their brand ambassador, for an undisclosed sum; following which, they also launched a high volume television, digital and print media campaign as well.

Competition in E-Grocery Market:

The online grocery market has grown big time in India since it was born.

With new player adding up to the market and many of the big offline supermarket going online everyone has to keep up their game to retain the existing customers and to attract new ones.

One of the big name in online grocery market and one of the biggest competitors for Bigbasket is “Grofers”.

Grofer right now is operating in 17 cities which is one less than BigBasket was launched in 2013 which is two years after BigBasket.

Grofer has also been investors favorite and raised around 150 million dollars in last 4 years.

Other Key players in the market are Pepper Tap and Zopnow and there is new big entrant Amazon. Amazon is the biggest name in e-commerce and has come to e-grocery market.

 The company started its operation in December 2016 although we don’t have any official data the company was able to attract many customers due to its name in the E-commerce market.

CHALLENGES

biggest challenges the company faces is with blue collar workers, which make up 75 percent of their workforce. Even if 30 people don’t show up, the entire business goes down.

“Customers don’t wait for two days for groceries

Don’t take more orders when you can’t deliver them.

businesses need capital. FOR EXPANSION

You cannot do the business in a small way. The whole business works only on scale

SWOT

Strengths in the SWOT Analysis of Big Basket :

STRENGTH

Product Range: Big Basket offers a huge range of products which stretches to about 18000 products.

Exotic Range: It also offers exotic fruits, vegetables and imported groceries which are not easily available in nearby retail outlets.

This gives them an edge in catering to customers who like buying such stuff.

Discounts: Big Basket offers huge discounts on various products.

They also have the product bundling technique to maximise sales and offering maximum discounts to the customers.

This makes them a lucrative option for customers to buy.

Convenience: Big Basket offers an escape from the hassle of standing in the queues of malls or going all the way to the retail stores.

 They give the products right at the door step and offer multiple payment options.

The on-time delivery guarantee makes them a lucrative option, Customers, especially in big cities where life is very fast and it is difficult to reach thThe customers, can shop at any time of the day.

Target Group: They have selected their target customers very carefully and have established a footing in the metropolitan and some tier-I cities.

They operate in Bangalore, Hyderabad, Mumbai, Pune, Chennai, Delhi, Mysore, Vadodara, Patna, Indore, Vijaywada, etc.

They are currently operational in about 25 cities.

Low Fixed Cost business model: Most of the items that Big Basket offers are perishable hence they depend on the retail stores they are coordinating with for the products.

This means they have no inventory cost and makes their business model more profitable.

Weakness  

Delivery Time: Big Basket delivers the groceries the next day. Many retailers have started the facility of home delivery to nearby societies and customers in just few minutes to hours. So customers prefer this instead of waiting for 24 hours.

High Variable Cost: Cost of running many delivery guys, delivery trucks, storage for perishable items, wastage during transportation makes the business run at a high variable cost. They have to bleed more money and will take longer to break even.

Minimum order quantity/price compulsion: Big Basket does not offer home-delivery below a certain set order price limit. This means that customers would be forced to add a product or two just to avail the service. This makes them lose a customers.

Be at home: Customers have to be at home when Big Basket is about to deliver. This means the customers have to plan according to the delivery time. If by some means the order gets delayed customer gets angry and unhappy by the service. On top of this they have to pay a little add on price for the home delivery.

Order Cancellations: They depend on stores that they have tied-up with to provide them the items. If they do not have the items available they won’t be able to deliver them. This sometimes tend in cancellation of orders. Out of stock issues tend to make the customers unhappy and repetitive of such issues makes the customers reluctant to reuse the service.

Opportunities in   Basket :

Market: Indian retail market is valued at more than approx. $550 million and grocery alone covers 60% of this share. Hence it’s a huge market with many players to accommodate and customers to cater.

Grocery Growth: India is the 6th largest grocery market in the world. E-commerce grocery market is growing with a year on year growth rate of 19%.

Expansion: Many cities are still not covered by these startups and Big Basket can target them and gain the first movers advantage. They can expand to tier-2 cities and increase their market.

Cross selling and Value Packaging – Cross selling is a major advantage for Big basket as it can sell multiple products by product bundling.

Threats in the SWOT Analysis of Big Basket :

Competition: It has small presence in terms of cities covered hence, it is getting a huge competition from other startups like Grofers, PepperTap, Nature’s Basket, Zop Now, Aaram Shop, Mera Grocer, etc.

Bigger Players: Bigger players in terms of financial backing and presence are also entering this lucrative industry. Players like Amazon, Flipkart and Google have also entered this industry. This may prove fatal for smaller players like Big Basket to compete with them.

Smaller Players: Many other localized shops have picked up on this trend and have started home delivery service to nearby customers thereby killing groups of target customers across regions and cities.

Customer Retention: It is very difficult to retain customers. They would tend to move with the service provider that offers the most discounts.